Systems and methods for adjusting the value of distressed properties

ABSTRACT

Systems and methods are provided for providing an adjustment to a value estimate for a property that is considered distressed. In one embodiment, a method includes receiving the estimate of value for the property; determining, based on a model, the adjustment to the estimate of value, such that the model accounts for a characteristic of the property and a characteristic of the loan; and providing the adjustment.

This is a continuation of application Ser. No. 11/116,325 (allowed),filed Apr. 28, 2005, which is incorporated herein by reference.

BACKGROUND OF THE INVENTION

I. Field of the Invention

The present invention generally relates to financial systems and tosystems and methods for processing financial information. Moreparticularly, the invention relates to systems and methods fordetermining value adjustments to properties securing mortgage loans thatare delinquent or have been subject to a foreclosure.

II. Background and Material Information

When a borrower is late in making mortgage payments or the mortgage isin default, an entity with an interest in the mortgage, such as alender, may act to protect its investment. Since the value of theproperty securing the mortgage is often maximized by keeping theborrower in place, the lender may want to assist the borrower. If themortgage is in default and the lender has foreclosed on the mortgagedproperty and taken possession of the property (referred to as realestate owned or REO), the lender may want to sell the property asquickly as possible. In either of these scenarios, the lender may havean interest in determining the value of the property.

A property is considered distressed when the property is in aforeclosure status or in a delinquent status. Specifically, a distressedproperty is considered to be in a foreclosure status when the propertysecuring a mortgage loan has been through foreclosure resulting in thereal estate being owned by an entity such as the lender. For example,the foreclosure property is transferred from the homeowner to anotherentity, such as a lender, servicer, or insurer, and then becomes REO.The distressed property is considered to be in a delinquent status whenthe corresponding mortgage loan has late mortgage payments. In somecases, if the mortgage payments have been chronically late (e.g., 3 ormore late mortgage payments or nearing foreclosure), the mortgage isconsidered “seriously” delinquent. When a property securing a mortgageis considered “distressed,” a lender may want to adjust the value of theproperty on its books to reflect the lower market value typical for suchproperties. For example, in the case of a foreclosed loan with theproperty in REO inventory, the lender might calculate an appropriateadjustment by finding a property comparable to the REO property and itsvalue, and then discounting the value of the comparable property by aflat percentage, e.g., 10%, to account for the foreclosure. The flatpercentage discount, an adjustment used by some lenders, produces arelatively inaccurate estimate of value. Alternatively, the lender mayobtain an appraisal of the property's value from an in-person appraiser.But, this option is expensive, costing several hundred dollars, and timeconsuming, taking days or weeks. In the case of delinquent mortgagepayments, a lender may use the value of a comparable property to helpdetermine whether to modify the borrower's mortgage terms to assist theborrower to retain the mortgaged property. Or, similar to the REO case,the lender may perform a flat value adjustment of, say, 10% for anyproperty securing a seriously delinquent loan. Again, a flat percentagediscount will be relatively inaccurate and the services of an in-personappraiser will be relatively expensive and time consuming.

As noted above, in both the foreclosure and delinquent cases, a lendermay use the value of a comparable property in assessing the value of thedistressed property. The value of a comparable property is a form of anappraisal. An appraisal provides a property value estimate indicatingthe market value for the property. The appraisal may be performed invarious ways including, for example, an in-person property appraisalperformed by an appraiser. During the in-person appraisal, the appraiserphysically inspects the property. Another form of valuation is a brokerprice opinion (BPO) performed by a real estate broker. Alternatively, anautomated valuation model serves as a tool that utilizes various factors(e.g., ZIP code, lot size, number of bedrooms, prior sales information,etc.) to appraise a property. Examples of automated valuation models(AVM) may be found in one or more of the following applications, all ofwhich are hereby incorporated by reference in their entirety: U.S.patent application Ser. No. 08/730,289, filed on Oct. 11, 1996, entitled“METHOD FOR COMBINING HOUSE PRICE FORECASTS” (now U.S. Pat. No.6,609,109); U.S. patent application Ser. No. 09/115,831, filed on Jul.15, 1998, entitled “SYSTEM AND METHOD FOR PROVIDING HOUSE PRICEFORECASTS BASED ON REPEAT SALES MODEL” (now U.S. Pat. No. 6,401,070);U.S. patent application Ser. No. 09/134,161, filed on Aug. 14, 1998,entitled “SYSTEM AND METHOD FOR PROVIDING PROPERTY VALUE ESTIMATES” (nowU.S. Pat. No. 6,842,738); and U.S. patent application Ser. No.09/728,061, filed on Dec. 4, 2000, entitled “METHOD FOR FORECASTINGHOUSE PRICES USING A DYNAMIC ERROR CORRECTION MODEL”. Other types ofappraisals that provide an estimate of property value may also be usedto appraise a property. For example, Freddie Mac's Home Value Explorerprovides an automated home valuation when the user submits the addressof a property.

SUMMARY OF THE INVENTION

The present invention is directed to systems and methods for processingfinancial information and, more particularly, systems and methods forusing property and financial information for determining valueadjustments to properties securing mortgage loans that are delinquent orhave been subject to foreclosure.

One embodiment consistent with the present invention provides systemsand methods for providing an adjustment to an estimate of value for aproperty that is considered distressed. Moreover, the systems andmethods may receive the estimate of value for the property. Furthermore,the systems and methods may determine, based on a model, the adjustmentto the estimate of value, such that the model accounts for acharacteristic of the property and a characteristic of the loan. Inaddition, the systems and methods may provide the adjustment.

Another embodiment consistent with the present invention providessystems and methods for providing an adjustment to an estimate of valuefor a property that is considered distressed. Moreover, the systems andmethods may receive the estimate of value for the property. Furthermore,the systems and methods may determine, when the property is in aforeclosure status, the adjustment based on a first model, such that thefirst model accounts for a characteristic of the property and theforeclosure status. In addition, the systems and methods may determine,when the property is in a delinquent status, the adjustment based on asecond model, such that the second model accounts for thecharacteristics of the property and the loan.

Additional features and advantages of the invention will be set forth inpart in the following description or may be learned by practice of theinvention. The objectives and advantages of the invention may berealized and attained by the system and method particularly described inthe written description and claims hereof as well as the appendeddrawings.

It is to be understood that both the foregoing general description andthe following detailed description are exemplary and explanatory onlyand are not restrictive of the invention, as described. Further featuresand/or variations may be provided in addition to those set forth herein.For example, the present invention may be directed to variouscombinations and subcombinations of the disclosed features and/orcombinations and subcombinations of several further features disclosedbelow in the detailed description.

BRIEF DESCRIPTION OF THE DRAWINGS

The accompanying drawings, which constitute a part of thisspecification, illustrate various embodiments and aspects of the presentinvention and, together with the description, explain the principles ofthe invention. In the drawings:

FIG. 1 depicts a block diagram of an exemplary system consistent withthe systems and methods of the present invention;

FIG. 2 is an exemplary flowchart for providing a value adjustmentconsistent with the systems and methods of the present invention;

FIG. 3 illustrates another exemplary system environment consistent withthe systems and methods of the present invention;

FIG. 4 is another exemplary flowchart for providing value adjustmentsconsistent with the systems and methods of the present invention;

FIG. 5 illustrates exemplary model consistent with the systems andmethods of the present invention; and

FIG. 6 depicts an exemplary flowchart for determining a model consistentwith the systems and methods of the present invention.

DETAILED DESCRIPTION

Reference will now be made in detail to the invention, examples of whichare illustrated in the accompanying drawings. Wherever possible, thesame reference numbers will be used throughout the drawings to refer tothe same or like parts.

Systems and methods consistent with the present invention permit alender, using a computing platform (or computer), to obtain an adjustedvalue for a mortgaged property that has been foreclosed or on which themortgage payments are delinquent. The more accurate value due to theadjustment may be used by the lender as a basis for modifying themortgage terms in the case of delinquent payments. In the case of aforeclosed property, the lender may use the adjusted value to helpdetermine a sales price for the property. In one embodiment of theinvention, a computer may receive an estimate of value for the property.Moreover, the computer may determine, based on a model, the adjustmentto the estimate of value, such that the model accounts for acharacteristic of the property and a characteristic of the loan. Thecomputer may then provide the adjustment.

FIG. 1 shows an exemplary system 1000 for providing an adjusted valuefor a property that is either in a foreclosure status or in a delinquentstatus. As used herein, the terms “mortgage,” “loan,” and “mortgageloan” are used interchangeably since mortgage is a type of loan securedby real property. As used herein, the terms “property” and “home” areused interchangeably to refer to a property securing a mortgage.Referring to FIG. 1, system 1000 includes a communication channel 1400,one or more lenders 1500, 1510, one or more borrowers 1610, 1620, one ormore information sources 1800, and a processor 1350.

The one or more lenders 1500, 1510 may include a financial entity, suchas a bank, mortgage bank, or mortgage note holder. Although FIG. 1refers to “lenders,” any of the following entities may determine anadjustment consistent with the systems and methods described herein: amortgage servicer, mortgage insurer, mortgage broker, mortgageoriginator, collection agency, representative of the financial entity,and/or individual. The one or more borrowers 1610, 1620 may include anentity, such as a homeowner, with a mortgage loan. The informationsources 1800 may include internal, external, proprietary, and/or publicdatabases, such as property databases, financial databases, anddemographic databases. Moreover, information sources 1800 may includeinformation received from an automated valuation model (AVM) thatprovides estimates of home or property values, such as Freddie Mac'sHome Value Explorer. The processor 1350 may include an entity (or theentity's computer) capable of processing information (e.g., amountindicative of the value of a property), determining a value adjustmentfor the property (now considered distressed), and then providing theadjustment, so that a lender may decide whether to adjust the salesprice of the distressed property that is in foreclosure or adjust theterms of the mortgage associated with the distressed property.

As used herein, the term “foreclosure” means a legal proceeding thatbars or extinguishes a mortgagor's (borrower) right of redeeming amortgaged property (with the phrase “in foreclosure” having the samemeaning as “foreclosure”). Real Estate Owned (REO) are properties nowowned by an entity, such as a lender, who has acquired the propertiesthrough foreclosure proceedings.

FIG. 2 depicts a flow chart with steps for providing a value adjustmentfor a mortgaged property that is in a foreclosure status or a delinquentstatus. Referring to FIGS. 1 and 2, processor 1350 receives frominformation sources 1800 an estimate of value that has not been adjustedto reflect the distressed condition of the property (step 2100). Forexample, given a property address, an AVM can provide an estimate of theproperty's value. In some cases, the AVM estimate of home value alsoincludes a standard deviation, which represents the expected amount oferror associated with the model used in the AVM, and prior home valueestimates. Processor 1350 also receives information about the property,mortgage loan, and/or borrower from information sources 1800. Next,processor 1350 determines a value adjustment based on a model, anexample of which is described below with respect to FIGS. 5 and 6 (step2200). The model may account for a variety of factors concerning theloan, the property (e.g., property address), and/or the borrower todetermine a value adjustment for the distressed property. Processor 1350may then provide the value adjustment for the distressed property (step2300). The adjustment may be in terms of a dollar reduction/increase tothe value estimate received in step 2100 (e.g., reduce $10,000 fromestimate received in step 2100), a percentage reduction/increase to thevalue adjustment received in step 2100 (e.g., reduce estimate receivedin step 2100 by 10%), or an estimate of value (e.g., an adjusted valueof $90,000). In the case of a mortgaged property that is in foreclosure,a lender (e.g., lender 1500) may use the adjusted value to help them seta market or sales price for the distressed property. In the case of amortgage having delinquent or seriously delinquent mortgage payments,lender 1500 may, based on the adjustment, offer a modification to theterms of the mortgage and to the corresponding monthly payments in aneffort to reduce the likelihood of a foreclosure—an outcome that isundesirable for both the lender and the borrower.

FIG. 3 illustrates another exemplary system environment 3000 consistentwith the systems and methods of the present invention. As illustrated inFIG. 3, the system environment 3000 includes a processor 1350, one ormore lenders 1500, 1510, one or more borrowers 1610, 1620, informationsources 1800, and a communication channel 1400. The processor 1350 mayalso include an input module 3100, an output module 3200, a computingplatform 3300, and one or more databases 3600. Although processor 1350is depicted as separate from lenders 1500, 1510, processor 1350 may belocated anywhere.

In one embodiment consistent with FIG. 3, computing platform 3300 mayinclude a data processor such as a PC, UNIX server, or mainframecomputer for performing various functions and operations. Computingplatform 3300 may be implemented, for example, by a general purposecomputer or data processor selectively activated or reconfigured by astored computer program, or may be a specially constructed computingplatform for carrying-out the features and operations disclosed herein.Moreover, computing platform 3300 may be implemented or provided with awide variety of components or systems including, for example, one ormore of the following: a central processing unit, a co-processor,memory, registers, and other data processing devices and subsystems.

Communication channel 1400 may include, alone or in any suitablecombination of a telephony-based network, a local area network (LAN), awide area network (WAN), a dedicated intranet, the Internet, a wirelessnetwork, bus, or a wireless connection. Further, any suitablecombination of wired and/or wireless components and systems may beincorporated into communication channel 1400. Although the computingplatform 3300 may connect to the lenders 1500, 1510 through thecommunication channel 1400, computing platform 3300 may connect directlyto lenders 1500, 1510.

Computing platform 3300 also communicates with input module 3100 and/oroutput module 3200 using connections or communication links, asillustrated in FIG. 3. Alternatively, communication between computingplatform 3300 and input module 3100 or output module 3200 may beachieved using a network (not shown) similar to that described above forcommunication channel 1400. A skilled artisan would recognize thatcomputing platform 3300 may be located in the same location or at ageographical separate location from input module 3100 and/or outputmodule 3200 by using dedicated communication links or a network.

Input module 3100 may be implemented with a wide variety of devices toreceive and/or provide information. Referring to FIG. 3, input module3100 may include an input device 3110, a storage device 3120, and/or anetwork interface 3130. Input device 3110 may also include a keyboard, amouse, a disk drive, telephone, or any other suitable input device forreceiving and/or providing information to computing platform 3300.Although FIG. 3 only illustrates a single input module 3100, a pluralityof input modules 3100 may also be used.

Storage device 3120 may be implemented with a wide variety of systems,subsystems, and/or devices for providing memory or storage including,for example, one or more of the following: a read-only memory (ROM)device, a random access memory (RAM) device, a tape or disk drive, anoptical storage device, a magnetic storage device, a redundant array ofinexpensive disks (RAID), and/or any other device capable of providingstorage and/or memory.

Network interface 3130 may exchange data between communication channel1400 and computing platform 3300 and may also exchange data betweeninput module 3100 and computing platform 3300. In one aspect of theinvention, network interface 3130 may permit a connection to at leastone or more of the following networks: an Ethernet network, an Internetprotocol network, a telephone network, a radio network, a cellularnetwork, a cable network, or any other network capable of beingconnected to input module 3100.

Output module 3200 may include a display 3210, a printer 3220, and/or anetwork interface 3230. Output module 3200 may be used to provide, interalia, an amount indicative of the adjusted value associated with thedistressed property. Further, the output from computing platform 3300may be displayed or viewed through display 3210 (e.g., a cathode raytube or liquid crystal display) and/or printer device 3220. For example,the adjusted value may be viewed on display 3210 and/or printed onprinter device 3220. Although FIG. 3 only illustrates a single outputmodule 3200, a plurality of output modules 3200 may be used.

Network interface 3230 exchanges data between the output module 3200 andcomputing platform 3300 and/or between computing platform 3300 and thecommunication channel 1400. Network interface 3230 may permit connectionto at least one or more of the following networks: an Ethernet network,and Internet protocol network, a telephone network, a cellular network,a radio network, a cable network, or any other network capable of beingconnected to output module 3200.

Database 3600 may store information including financial information,demographic information, real estate information, credit information,loan application information, and other public and/or proprietaryinformation. For example, database 3600 may store information receivedfrom information sources 1800 such as information from DataQuickInformation Systems, International Data Management Inc., First AmericanCorporation, county property and/or tax records, TransUnion LLC, EquifaxInc., Experian, Acxiom, Department of Commerce, and Bureau of Labor andStatistics. Moreover, database 3600 may store demographic informationassociated with a property, such as a median or average property valuein the neighborhood or region associated with the property, and/or aproperty value or property value growth rate with respect to previousperiods. Although database 3600 is shown in FIG. 3 as being connected tocomputing platform 3300, a skilled artisan would recognize that database3600 may be located anywhere (or in multiple locations) and connected tocomputing platform 3300 via direct links or networks.

FIG. 4 shows another exemplary flowchart with steps for providing avalue adjustment for a distressed property. Referring to FIGS. 3 and 4,computing platform 3300 may receive for the property a home valueestimate and/or a corresponding standard deviation for that estimate(step 4100). Computing platform 3300 may then determine whether theproperty is in REO status (i.e., in foreclosure) (step 4200). If inforeclosure, computing platform 3300 may determine an adjusted valuebased on a model (also referred to as a statistical model) that accountsfor characteristics of the loan (e.g., loan type), the property(including, e.g., a property address, a home value estimate andaverage/median home prices in the neighborhood), the borrower (e.g.,credit history), and/or the REO status (yes at step 4200 and step 4300).Computing platform 3300 may then provide an adjusted value for the REOproperty (step 4600). If not REO, computing platform 3300 may determinewhether the home mortgage has payments that are seriously delinquent (noat step 4200 and step 4400). If the home is not in REO status and itsmortgage does not have seriously delinquent payments (no at steps 4200and 4400), computing platform 3300 returns to step 4100. When in theseriously delinquent status, computing platform 3300 may determine anadjusted value based on a statistical model that accounts forcharacteristics of the loan, the property, and the borrower (yes at step4400 and step 4500). Computing platform 3300 may then provide anadjusted value for the property having a mortgage in a seriouslydelinquent status (step 4700). With the above description of theflowchart of FIG. 4, the following describes additional exemplarydetails of steps 4100-4700.

To receive a home value estimate and/or corresponding standard deviationof the property (step 4100), computing platform 3300 may receive a valueestimate of the property. In some embodiments, the value estimate isreceived from an AVM, although any mechanism for providing an indicationof the value of the property securing the mortgage could be usedinstead. Moreover, the value estimate may include the value of theproperty when the mortgage was originated and/or when the mortgage wasconsidered to be in a foreclosure status or in a delinquent status. Insome embodiments, the value estimate is received from informationsources 1800 including, for example, Freddie Mac's Home Value Explorerand/or database 3600. However, the value estimate in step 4100 (e.g.,received from an AVM) has not yet been adjusted to account forforeclosure or delinquency.

To determine whether the property is in REO status (step 4200),computing platform 3300 receives an indication from the lender. Forexample, lender 1500 may send a property address to computing platform3300 with an indication (e.g., a flag, message, or data field) that theproperty is REO by the lender. In other cases, lender 1500 may send theproperty address, the indication, and/or other information associatedwith the borrower (e.g., income, credit history, and/or credit score)and the corresponding mortgage loan information (e.g., mortgage loanapplication information, mortgage payment history, and mortgage type).

To determine an adjusted value of the property, computing platform 3300uses the home value estimate of the distressed property and any otherinformation required by the statistical model that accounts forcharacteristics of the loan, the property (including, e.g., a home valueestimate for the property and a median home value for the correspondingneighborhood), the borrower, and/or the REO status (yes at step 4200 andstep 4300). FIG. 5 depicts a block diagram including an exemplarystatistical model 520. Referring to FIG. 5, statistical model 520receives one or more inputs, such as loan information 505, propertyinformation 510 (e.g., a home value estimate), and borrower information515 to determine an output, such as an adjusted value 530. As usedherein, a “model” means a mathematical description used to determine adesired output based on one or more inputs. As used herein, the phrase“statistical model” refers to a model that uses statistical techniques.

Referring again to FIG. 4, to provide the adjustment for the REOproperty (step 4600), computing platform 3300 may send to a lender(e.g., lender 1500) the value adjustment in the form of an amountindicative of the discount to the outstanding mortgage balance owed bythe borrower. For example, if the mortgage was foreclosed with $100,000remaining on the mortgage, the adjusted value may indicate that thedistressed property has an “adjusted market value” of $80,000—theadjustment taking into account a variety of factors, not solely the factthat the property is in foreclosure. In this case, lender 1500 maydecide to list the property for $80,000 to maximize sale price whileminimizing time-on-market and risk of over overpricing the property.While comparable non-REO properties may sell for $100,000, this propertywould sit on the market at that price, due to the stigma attached toforeclosed properties, and likely repair and other problems it hassuffered from neglect while the loan was moving through foreclosure.Although the previous example describes value adjustments in terms ofdollars, any indication of value may be used instead. Returning to theprevious example, the adjustment may be expressed as percentage, such as20% (equivalent to the $80,000 adjusted value described in the exampleabove).

To determine whether the home has a mortgage in a seriously delinquentstatus (no at step 4200 and step 4400), computing platform 3300 mayreceive an indication from the lender associated with the mortgage. Forexample, lender 1500 may send a property address to computing platform3300 with an indication (e.g., a flag, message, or data field) that theloan on the property is 90 days past due. For example, lender 1500 maysend along with the property address, the number of late payments (ormonths) that the mortgage is delinquent. Alternatively, lender 1500 maysimply send an indication that the mortgage is delinquent or seriouslydelinquent. As noted above, lender 1500 may also send the propertyaddress, the indication, and other information associated with theborrower, property, and/or the mortgage loan.

To determine an adjusted value based on a statistical model thataccounts for characteristics of the loan, the property, and the borrower(yes at step 4400 and step 4500), computing platform 3300 uses theinitial home value estimate of the distressed property and any otherinformation required by the model, such as loan information (e.g., loanapplication information, type of mortgage, mortgage purpose, paymenthistory, REO status, or delinquent status), property information (e.g.,home value estimate and corresponding standard deviation, prior salesvalue or estimated value for the property at loan origination or othertime, demographics concerning property values in neighborhood andquarterly change to such values, property type, and property address),and/or borrower information (e.g., income, credit score, and credithistory) to calculate the adjusted value. In some embodiments, twodifferent models are used, one for seriously delinquent mortgages (step4500) and another model for mortgages where the underlying property isREO (step 4300). Alternatively, a single model may be used for steps4300 and 4500 with the model adding an additional value adjustmentcorresponding to the REO status of step 4300, e.g., by increasing anydetermined price adjustment by an additional amount to account forforeclosure. As noted above, FIG. 5 is an exemplary statistical model520 which can be used as a model for step 4300 or, alternatively, forstep 4500 with REO status being input to the model as loan information.

To provide an adjusted value for the home having a mortgage that is in adelinquent status or in a seriously delinquent status (step 4700),computing platform 3300 may send to lender 1500 and/or borrower 1610 theadjusted value in the form of an amount indicative of the discount tothe outstanding mortgage. For example, a 30-year mortgage with $100,000outstanding balance would have a monthly principal and interest (P&I)payment of $599 at 6% interest. If that borrower is seriouslydelinquent, the adjusted value provided to a lender may indicate thatthe property collateralizing that mortgage has an adjusted value of$90,000. In this example, the lender could decide that the loss it wouldtake on the property from foreclosing on the loan is great enough thatit will adjust the terms of the loan to lower the interest rate on theloan to 5%, extending the term, and offering other adjustments such thatthe payments are brought back to current, and the monthly P&I falls to$500. Such changes in the terms of the mortgage will increase thelikelihood that the borrower would make timely payments on the mortgageloan, thus avoiding foreclosure and the almost sure loss to the lenderof $10,000 from the property value decline below loan balance as well asthe loss of loan interest.

In some cases, the adjusted value may indicate that the distressedproperty has a value greater than the amount outstanding on the loan.Returning to the above example of a 30-year mortgage with $100,000outstanding balance, the adjusted value may show that the distressedproperty now has a value of $150,000. If the borrower is seriouslydelinquent, the lender could adjust one or more terms of the mortgage,which might increase the likelihood that the borrower could make timelypayments on the loan. But, in this case, the lender would not need tolower the interest rate or take some loss now, since the lender isunlikely to face much loss if the mortgage forecloses and the lenderacquires the property. These examples show that the distressed valuesprovided by the invention can help the lender better manage its riskfrom seriously delinquent loans. The adjusted value statisticallyderived from the automated property value along with the otherinformation about the property, loan, and borrower improve the model'sestimate to reduce the lender's risk and raise profitability.

FIG. 6 is a flowchart with exemplary steps for determining a statisticalmodel. Referring to FIG. 6, computing platform 3300 may receivehistorical information for one or more mortgages having payments thatwere previously delinquent and/or in foreclosure (step 6100). Moreover,the historical information for mortgages includes the adjusted valueused for the sale of the property (or appraisal, broker price opinion,or original sales price in the delinquent status case) as well as loaninformation 505, property information 510, and/or borrower information515. A skilled artisan would recognize that such historical informationis also referred to as “truth” data used to determine the model.Computing platform 3300 then determines the statistical model 520 basedon the received information. In some embodiments, the model can bedetermined before it is used in connection with FIGS. 2 and 4. Moreover,computing platform 3300 may provide statistical model 520 to database3600 for later use when determining value adjustments or, alternatively,provide the determined statistical model 520 to any financial entityseeking to determine value adjustments for distressed properties. Assuch, the model can be determined once based on historical information(such as loan, borrower, and property information as well as REO salesinformation and any mortgage balance reduction information), so thatmodel 520 can be used many times with any other loans for which a valueadjustment is desired.

To receive historical information for one or more mortgage loans thatwere in a previously delinquent status and/or in a foreclosure status(step 6100), the computing platform 3300 may receive historicalinformation for the loans from sources of information, such as database3600 or information sources 1800. The historical information may includeborrower information (e.g., income, credit score, and/or credithistory), loan information (e.g., loan application information; loantype, such as fixed, adjustable; loan purpose, such as cash-out,refinance, or purchase; payment history; REO status; and/or delinquencystatus), and/or property information (e.g., property address, home valueestimate, standard deviation, average/median price of comparable home,growth to home price when compared to a previous quarter, and/orestimated property value at an earlier time such as loan origination).

Moreover, the historical information may include information that isconsidered reliable and verified (e.g., “truth” data). Althoughunverified information can be used, the accuracy of the model determinedin step 6200 may be improved by using data with reliable valueadjustment information and loan information.

In one aspect of the invention, computing platform 3300 may also receivefrom database 3600 or information sources 1800 one or more of thefollowing information that may serve as historical information: borrowercredit information (e.g., credit history); a credit score; a credit cardbalance; a credit card limit; a ratio of a credit card balance to acredit card limit; a borrower's mortgage loan size; a borrower's carloan size; a borrower's delinquencies, such as 30, 60, or 90-daydelinquencies (e.g., past due payments on debt); the initiation date offoreclosure proceedings; a median (or average) income for a region, suchas a street, a neighborhood, a city, a ZIP code, a county, a state, acountry, a census tract, and/or a metropolitan statistical area; anindication of whether the borrower is a first time home buyer; a loanpurpose, such as whether the loan is for a purchase, a refinance, acash-out refinance, or a second lien; a loan-to-value ratio forborrower's mortgage loan; a total loan-to-value ratio of all loanssecured by the property; a borrower's current home value; an estimatedvalue as of the loan origination date; an indication of whether themortgage loan is secured by a condominium, a single family home, atownhouse, a 2-4 unit dwelling, a multifamily dwelling, a home in aplanned community, or manufactured housing; number of wage earners inthe borrower's household; number of co-borrowers; a number indicatingthe quantity of residential units on a property; and/or any otherinformation that could impact a property value. Moreover, computingplatform 3300 may receive the historical information for a plurality ofpast loans.

To determine statistical model 520 based on the received information(step 6200), the computing platform 3300 may process the historicalinformation received in step 6100 based on statistical techniques, suchas a least squared error approach. The least square error approach isknown and is described in many textbooks including the textbook titledEconometric Methods by J. Johnston (3rd Edition 1984). Specifically, todetermine the model, computing platform 3300 determines the coefficientsof the model based on the received historical information that includesknown values.

In one embodiment, computing platform 3300 uses a model based on thefollowing equation:

${\ln\;{BPO}_{i}} = {b_{o} + {\sum\limits_{j = 1}^{k}{b_{j}X_{ji}}} + e_{i}}$where BPO corresponds to adjusted value for the distressed property; lnBPO represents the natural log of that value; b₀ corresponds to anintercept term; b_(j) corresponds to coefficients of the model; X_(j)corresponds to variables used in the model; e_(i) corresponds to themodel error term; i corresponds to the i^(th) loan in the receivedhistorical information having n loans total; and j represents the j^(th)coefficient for j equal to 1 to k.

As noted above, the historical information may include loans (e.g., nloans) having information concerning the property, loan, and/orborrower. For example, the historical information may include one ormore of the following: unpaid principal balance (UPB) of the mortgage;loan to value (LTV) ratio; total LTV of all mortgages on the property;loan purpose (e.g., a flag or value indicative of whether the mortgageis for a refinance, cash-out refinance, or a purchase); home valueinformation (e.g., a home value estimate, an automated home valueestimate (AVM) at origination of the mortgage purchasing the property,any difference between the mortgage origination value and an automatedhome value estimate (AVM) determined retrospectively for the originationof the mortgage, a median property value in a region associated with thedistressed property, and any changes to median and/or average propertyvalues in the region with respect to a previous quarter); property type(e.g., condominium, co-op, single family home, manufactured housing,etc.); amount of time since mortgage origination; REO status; and anyother information that may be indicative of the adjusted value of aproperty that is distressed. One or more of the aforementionedhistorical information can be associated with a coefficient b_(j) in thestatistical model.

Referring to the above equation, since BPO (historical, known adjustedsales price, appraisal, or broker price opinion) and the variables X_(j)are known for all of the mortgages included in the historicalinformation received in step 6100, computing platform 3300 may determinethe unknown coefficients b_(j) using known statistical techniques, suchas a least squares regression, or variant such as weighted least squaresregression. Once the model coefficients b_(j) are determined based onthe historical information, model 520 has been determined and may thenbe provided for later use (step 6300).

Once the model is determined, computing platform 3300 uses thedetermined coefficients b_(j) to process any mortgage loans.Specifically, when a home value is received in step 4100 and theproperty is REO (steps 4100 and yes at step 4200), computing platform3300 may use the received home value estimate and multiply that value bythe corresponding coefficient b_(j). Moreover, any other informationreceived in step 4100 can be treated as a variable X_(j) and multipliedby a corresponding coefficient b_(j) in the statistical model, such thatthe adjusted value (labeled BPO) is determined for that mortgage.

By way of example, steps 6100-6300 may yield the following model:

TABLE 1 Exemplary Model 1 In (BP0) 2 = 0.68 \* intercept *\ 3 +0.94* In(HVE)  \*natural log of HVE as of BPO date*\ 4 + 0.36*COUNTY_INCOME\*natural log of median income in property's ZIP *\) 5 +404.12*GROWTH \*negative growth in property values from quarter before BPO *\ 6−0.146*NCOREFI   \*cash out refinance flag *\ 7 +0.06*HVEORIGPRCN) \*standardized difference between HVE value at loan origination andgiven origination value *\

Referring to Table 1 above, the model coefficients are +0.68, +0.94,+0.36, +404.12, −0.146, and +0.06. Each coefficient corresponds to avariable, such as HVE information received in step 4100 and/or otherinformation associated with the loan, borrower, or property. Referringagain to Table 1, the received natural log of HVE is multiplied by thecoefficient 0.94 (line 3). Computing platform 3300 then multiplies thecoefficient 0.36 by the median ZIP income (in dollars) for the ZIP coderegion associated the distressed property (line 4). In addition,computing platform 3300 multiplies coefficient 404.12 by the rate ofgrowth in property values in the ZIP code for the property in thequarter before the broker price opinion (e.g., a 2% decrease in houseprice values in the ZIP of the property when compared to the previous 3month period) (line 5). In addition, computing platform 3300 multiplesthe coefficients −0.146 by a flag that indicates whether the buyer ofthe original mortgage received cash as part of a cash-out refinancing(line 6), and multiples the coefficient 0.06 by the standardizeddifference between the home value estimate at origination (e.g., aretrospective HVE) of the loan and the origination value (e.g., salesprice or appraisal value) of the loan (line 7). Computing platform 3300then sums row 2 with the determined products of rows 3-7. Computingplatform 3300 then exponentiates that sum to determine the BPO, i.e.,the adjusted value.

In some embodiments, to determine a home value estimate at origination aretrospective HVE is used, as described in U.S. patent application Ser.No. 10/679,516, filed Oct. 7, 2003, titled “Systems and Methods forRetrospective Home Value Scoring,” which is incorporated by reference inits entirety.

The coefficients listed in Table 1 (e.g., HVE, COUNTY_INCOME, GROWTH,NCOREF, and HVEORIGPRCN) are only exemplary since other coefficients maybe determined during steps 6100-6300 and then used to determine theadjusted value of the distressed property. Moreover, the use of 5coefficients in Table 1 is only exemplary since any number may be used.

The systems herein may be embodied in various forms including, forexample, a data processor, such as the computer that also includes adatabase. Moreover, the above-noted features and other aspects andprinciples of the present invention may be implemented in variousenvironments. Such environments and related applications may bespecially constructed for performing the various processes andoperations of the invention or they may include a general-purposecomputer or computing platform selectively activated or reconfigured bycode to provide the necessary functionality. The processes disclosedherein are not inherently related to any particular computer or otherapparatus, and may be implemented by a suitable combination of hardware,software, and/or firmware. For example, various general-purpose machinesmay be used with programs written in accordance with teachings of theinvention, or it may be more convenient to construct a specializedapparatus or system to perform the required methods and techniques.

Systems and methods consistent with the present invention also includecomputer readable media that include program instruction or code forperforming various computer-implemented operations based on the methodsand processes of the invention. The media and program instructions maybe those specially designed and constructed for the purposes of theinvention, or they may be of the kind well known and available to thosehaving skill in the computer software arts. Examples of programinstructions include machine code, such as produced by a compiler, andfiles containing a high level code that can be executed by the computerusing an interpreter.

Furthermore, although the embodiments above refer to processinginformation related to mortgage loans secured by improved real property,systems and methods consistent with the present invention may processinformation related to other types of loans or credit instruments,including those secured by property, such as automobiles and/or personalproperty.

What is claimed is:
 1. A non-transitory computer-readable storage mediumcomprising instructions which, when executed by a computing platformconnected to a data processor and at least one database, perform amethod comprising: receiving, by the data processor from the at leastone database through a network communication channel, an indication ofcurrent distress for a property for which there is a correspondingexisting loan; receiving, by the data processor through the networkcommunication channel, first data including an estimate of value for theproperty; receiving, by the data processor through the networkcommunication channel, second data including an outstanding mortgagebalance for the corresponding existing loan, the second data beingdifferent from the first data; selecting, using the data processor, oneof a first model stored in the at least one database when the indicationof current distress for the property includes a foreclosure status or asecond model stored in the at least one database when the indication ofcurrent distress indicates that one or more payments for the existingloan are overdue; calculating, using the data processor and based on theselected first or second model retrieved from the at least one database,an adjustment to the estimate of value, the selected first or secondmodel accounting for the first data including the estimate of value forthe property and the second data including the outstanding mortgagebalance, the calculating including altering the adjustment based on theindication of current distress; providing, through the networkcommunication channel, the adjustment to store in the database; anddetermining, using the data processor, when the indication of currentdistress indicates that one or more payments for the existing loan areoverdue, whether to modify one or more terms of the existing loan basedon the adjustment.
 2. The non-transitory computer-readable storagemedium of claim 1, wherein an automated valuation mode is used todetermine the first data representing the estimate of value for theproperty.
 3. The non-transitory computer-readable storage medium ofclaim 2, the method further comprising: receiving a standard deviationassociated with the automated valuation model.
 4. The non-transitorycomputer-readable storage medium of claim 1, the method furthercomprising: receiving a comparison of a purchase price or appraisedvalue at loan origination with an as-of-origination estimated value ofthe property.
 5. The non-transitory computer-readable storage medium ofclaim 1, wherein calculating the adjustment includes accounting for acharacteristic of a borrower.
 6. The non-transitory computer-readablestorage medium of claim 1, wherein calculating the adjustment includesaccounting for a characteristic of the existing loan.
 7. Thenon-transitory computer-readable storage medium of claim 1, whereincalculating the adjustment includes accounting for a characteristic ofthe property.
 8. The non-transitory computer-readable storage medium ofclaim 1, wherein the one or more terms of the existing loan comprises alength of the loan, an interest rate of the loan, or an adjustment thatmodifies a periodic payment on the loan.
 9. The non-transitorycomputer-readable storage medium of claim 1, the method furthercomprising: determining the selected first or second model based onhistorical information.
 10. The non-transitory computer-readable storagemedium of claim 9, the method further comprising: determining theselected first or second model as a statistical model based on thefollowing equation:${\ln\;{BPO}_{i}} = {b_{o} + {\sum\limits_{j = 1}^{k}{b_{j}X_{ji}}} + {e_{i}.}}$11. The non-transitory computer-readable storage medium of claim 9,wherein historical information includes at least one of an appraisal, abroker price opinion, or an original sales price.
 12. The non-transitorycomputer-readable storage medium of claim 1, the method furthercomprising: providing the adjustment as a percentage change to theestimate of value for the property.
 13. The non-transitorycomputer-readable storage medium of claim 1, the method furthercomprising: providing the adjustment as a dollar change to the estimateof value for the property.
 14. A non-transitory computer-readablestorage medium comprising instructions which, when executed by acomputing platform connected to a data processor and at least onedatabase, perform a method for providing an adjustment to an estimate ofvalue for a property comprising: receiving, by the data processor fromthe at least one database through a network communication channel, aflag representing an indication of current distress for the property forwhich there is a corresponding existing loan; receiving, by the dataprocessor through the network communication channel, first dataincluding the estimate of value for the property; receiving, by the dataprocessor through the network communication channel, second dataincluding an outstanding mortgage balance for the corresponding existingloan, the second data being different from the first data; selecting,using the data processor, one of a first model stored in the at leastone database when the indication of current distress for the propertyincludes a foreclosure status or a second model stored in the at leastone database when the indication of current distress indicates that oneor more payments for the existing loan are overdue; calculating, usingthe data processor and when the indication of current distress is aforeclosure status, the adjustment based on the first model retrievedfrom the at least one database, the first model using the first dataincluding the estimate of value for the property and the second dataincluding the outstanding mortgage balance, the first model altering theadjustment based on the foreclosure status; calculating, using the dataprocessor and when the indication of current distress indicates that oneor more payments for the existing loan are overdue, the adjustment basedon the second model retrieved from the at least one database, the secondmodel using the first data including the estimate of value for theproperty and the second data including the outstanding mortgage balance;and determining, using the data processor, whether to modify one or moreterms of the existing loan based on the adjustment.
 15. Thenon-transitory computer-readable storage medium of claim 14, wherein anautomated valuation model is used to determine the first datarepresenting the estimate of value for the property.
 16. Thenon-transitory computer-readable storage medium of claim 15, the methodfurther comprising: receiving a standard deviation associated with theautomated valuation model.
 17. The non-transitory computer-readablestorage medium of claim 14, the method further comprising: receiving acomparison of a purchase price or appraised value at loan originationwith an as-of-origination estimated value of the property.
 18. Thenon-transitory computer-readable storage medium of claim 14, whereincalculating the adjustment includes accounting for a characteristic of aborrower.
 19. The non-transitory computer-readable storage medium ofclaim 14, wherein calculating the adjustment includes accounting for acharacteristic of the existing loan.
 20. The non-transitorycomputer-readable storage medium of claim 14, wherein calculating theadjustment includes accounting for a characteristic of the property. 21.The non-transitory computer-readable storage medium of claim 14, whereinthe one or more terms of the existing loan comprises a length of theloan, an interest rate of the loan, or an adjustment that modifies aperiodic payment on the loan.
 22. The non-transitory computer-readablestorage medium of claim 14, the method further comprising: determiningthe selected first or second model based on historical information. 23.The non-transitory computer-readable storage medium of claim 22, themethod further comprising: determining the selected first or secondmodel as a statistical model based on the following equation:${\ln\;{BPO}_{i}} = {b_{o} + {\sum\limits_{j = 1}^{k}{b_{j}X_{ji}}} + {e_{i}.}}$24. The non-transitory computer-readable storage medium of claim 22,wherein historical information includes at least one of an appraisal, abroker price opinion, or an original sales price.
 25. The non-transitorycomputer-readable storage medium of claim 14, the method furthercomprising: providing the adjustment as a percentage change to theestimate of value for the property.
 26. The non-transitorycomputer-readable storage medium of claim 14, the method furthercomprising: providing the adjustment as a dollar change to the estimateof value for the property.